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View Policies Current Attempt in Progress Thomas has just won the Flyball Lottery. He has two options for receiving his prize. The first option is to accept a $133,000 cash payment today. The second option is to receive $21.200 at the end of each of the next 19 years and a $25 200 lump sum payment in the 20th year. Thomas can invest money at a 7% rate. Click here to view the factor table. (a) Calculate the present value of the two options. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answer to 0 decimal place, c.8. 58.971) Option 1 Option 2 Present value Which option should Thomas choose to receive his winnings? Option 2 Option 1 R 4 decimo NE WANA Magittar.airper. APPENDIX 9.1 Present value of $1 received in n periods. Periods 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 16% 18% 20 1 2 3 4 5 4% 0.9615 0.9246 0.8890 0.8548 0.8219 0.9524 0.9070 0.8638 0.8227 0.7835 0.9434 0.8900 0.8396 0.7921 0.7473 0.9346 0.8734 0.8163 0.7629 0.7130 0.9259 0.8573 0.7938 0.7350 0.6806 0.9174 0.8417 0.7722 0.7084 0.6499 0.9091 0.8264 0.7513 0.6830 0.6209 0.9009 0.8116 0.7312 0.6587 0.5935 0.8929 0.7972 0.7118 0.6355 0.5674 0.8850 0.7831 0.6931 0.6133 0.5428 0.8772 0.7695 0.6750 0.5921 0.5194 0.8621 0.7432 0.6407 0.5523 0.4761 0.8475 0.7182 0.6086 0.5158 0.4371 0.83 0.69 0.57 0.48 0.40 6 7 8 9 10 0.7903 0.7599 0.7307 0.7026 0.6756 0.7462 0.7107 0.6768 0.6446 0.6139 0.7050 0.6663 0.6651 0.6227 0.6274 0.5820 0.5919 0.5439 0.5584 0.5083 0.6302 0.5835 0.5403 0.5002 0.4632 0.5963 0.5470 0.5019 0.4604 0.4224 0.5645 0.5132 0.4665 0.4241 0.3855 0.5346 0.4817 0.4339 0.3909 0.3522 0.5066 0.4523 0.4039 0.3606 0.3220 0.4803 0.4251 0.3762 0.3329 0.2946 0.4556 0.3996 0.3506 0.3075 0.2697 0.4104 0.3538 0.3050 0.2630 0.2267 0.3704 0.3139 0.2660 0.2255 0.1911 0.33 0.27 0.23 0.19 0.16 11 12 13 14 15 0.6496 0.6246 0.6006 0.5775 0.5553 0.5847 0.5568 0.5303 0.5051 0.4810 0.5268 0.4970 0.4688 0.4423 0.4173 0.4751 0.4440 0.4150 0.3878 0.3624 0.4289 0.3971 0.3677 0.3405 0.3152 0.3875 0.3555 0.3262 0.2992 0.2745 0.3505 0.3186 0.2897 0.2633 0.2394 0.3173 0.2858 0.2575 0.2320 0.2090 0.2875 0.2567 0.2292 0.2046 0.1827 0.2607 0.2366 0.1954 0.1619 0.13 0.2307 0.2076 0.1685 0.1372 0.11 0.2042 0.1821 0.1452 0.1163 0.09 0.1807 0.1597 0.1252 0.0985 0.07 0.1599 0.1401 0.1079 0.0835 0.06 16 17 18 19 20 0.5339 0.5134 0.4936 0.4746 0.4564 $1 (1 + 1)" 0.4581 0.4363 0.4155 0.3957 0.3769 0.3936 0.3714 0.3503 0.3305 0.3118 0.3387 0.3166 0.2959 0.2765 0.2584 0.2919 0.2519 0.2703 0.2311 0.2502 0.2120 0.2317 0.1945 0.2145 0.1784 0.2176 0.1978 0.1799 0.1635 0.1486 0.1883 0.1696 0.1528 0.1377 0.1240 0.1631 0.1456 0.1300 0.1161 0.1037 0.1415 0.1229 0.1252 0.1078 0.1108 0.0946 0.0981 0.0829 0.0868 0.0728 0.0930 0.0802 0.0691 0.0596 0.0514 0.0708 0.0600 0.0508 0.0431 0.0365 0.05 0.04 0.03 0.03 0.024 PV = APPENDIX 9.2 Present value of an annuity of $1 per period Periods 5% 6% 7% 8% 9% 10% 11% 12% 16% 18% 20% 1 2 3 4 5 0.9615 1.8861 2.7751 3.6299 4.4518 0.9524 1.8594 2.7232 3.5460 4.3295 0.9434 1.8334 2.6730 3.4651 4.2124 0.9346 0.9259 0.9174 0.9091 1.8080 1.7833 1.7591 1.7355 2.6243 25771 2.5313 2.4868 3.3872 3.3121 3.2397 3.1698 4.100239927 3.8897 3.7907 0.9009 1.7125 2.4437 3.1024 3.6959 0.8929 1.6901 2.4018 3.0373 3.6048 13% 14% 0.8850 0.8772 1.6681 1.6467 2.3612 2.3216 2.9745 2.9137 3.5172 3.4331 0.8621 1.6052 2.2459 2.7982 3.2743 0.8475 15656 2.1743 2.6901 3.1272 0.8333 1.5278 2.1065 2.5887 2.9906 6 7 8 9 10 5.2421 6.0021 6.7327 7.4353 8.1109 5.0757 5.7864 6.4632 7.1078 7.7217 4.9173 5.5824 6.2098 6.8017 7.3601 4.7665 4.62294.4859 4.3553 5.3893 5.2064 5.0330 4.8684 5.9713 5.7466 5.5348 5.3349 6.5152 6.2469 5.9952 5.7590 7.0236 6.7101 6.4177 6.1446 4.2305 4.7122 5.1461 5.5370 5.8892 4.1114 3.9975 4.5638 4.4226 4.9676 4.7988 5.3282 5.1317 5.6502 5.4262 3.8887 4.2883 4.6389 4.9464 5.2161 3.6847 3.4976 40386 3.8115 4.3436 4,0776 4.6065 4.3030 4.8332 4.4941 3.3255 3.6046 3.8372 4,0310 4.1925 11 12 13 14 15 8.7605 9.3851 9.9856 10.5631 11.1184 8.3064 8.8633 9.3936 9.8986 10.3797 7.8869 8.3838 8.8527 9.2950 9.7122 7.4987 7.1390 6.805264951 7.9427 7.5361 7.1607 6.8137 8.3577 7.9038 7.4869 7.1034 8.74558.2442 7.78627.3667 9.1079 8.5595 8.0607 76061 6.2065 5.9377 6.4924 6.1944 6.74996,4235 6.9819 6.6282 7.1909 6,8109 5.6869 5.9176 6.1218 6.3025 6.4624 5.4527 5.6603 5.8424 6,0021 6.1422 5.0286 4.6560 4.3271 5.1971 4.7932 4.4392 5.3423 4.9095 4.5327 5.4675 5.0081 4.6106 5.5755 5,0916 4.6755 7.3792 7.5488 7.2016 7.8393 7.9633 16 17 18 19 20 6.9740 7.1196 7.2497 7.3658 7.4694 6.6039 6.2651 5,6685 6.7291 6.3729 5.7487 6.8399 6.4674 5.8178 6.9380 6.5504 5.8775 7.0248 6.6231 5.9288 5,1624 5.2223 5.2732 5.3162 5.3527 4.7296 4.7746 4.8122 4.8435 48696 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8 2014 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 13.5903 124622 11.4699 10.5940 9.8181 9.1285 8.5136 1 $1 - (1+1) 1 PVA =

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